AFRICA INVESTMENT-OPEC-style platinum cartel a pipe-dream – by Ed Stoddard (Reuters U.S. – May 16, 2013)


JOHANNESBURG – May 16 (Reuters) – South Africa is the Saudi Arabia of platinum with steroids thrown in.

But Pretoria could never manipulate the platinum price the way the Middle Eastern kingdom can influence oil’s and talk of a platinum cartel, perhaps along the lines of the Organization of the Petroleum Exporting Countries (OPEC), is a pipe-dream.

The world’s top platinum producers, South Africa and Russia, agreed to attempt to cope with excess supplies of the metal through a memorandum of understanding signed in March during the BRICS emerging market powers meeting in Durban.

South Africa’s mines minister Susan Shabangu spoke of “balancing” rather than “controlling the market” while still expressing concern about oversupply and prices. Confusingly, Russian officials said influencing prices was not the aim.

If not, then what would be the ultimate aim of cooperation between the platinum powerhouses, especially if one of the parties’ stated goals is to “balance” the market?

This has sparked speculation about how supplies could be reined in to lift prices for the white metal used to build emissions-capping catalytic converters in automobiles.

Talk has ranged from an OPEC-type model to something far more modest, along the lines of marketing cooperation, but getting anything off the ground is unlikely as the crude and platinum industries are like oil and water.

For starters, crude production in Saudi Arabia is firmly in the hands of the state through the national oil company Aramco.

Over the past few years, it has been almost alone in OPEC in actually curbing production intentionally as other members have refrained from doing so because of concerns over lost revenue.

South Africa may sit on 80 percent of the world’s known platinum reserves but unlike in Saudi Arabia, there is no state company pulling its coveted resource out of the ground.

So any calls for production cuts would have to get a buy-in from several companies especially the top three producers of the precious metal: Anglo American Platinum (Amplats), Impala Platinum and Lonmin.

They in fact would like to cut some output to boost moribund prices which mean many shafts are currently unprofitable. Spot platinum on Thursday fetched $1,469.74 an ounce, down 34 percent from a record high of $2,240 hit in March 2008.

But their hands are tied on a number of fronts.

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